The Potential Downside of Unlimited PTO and Vacations

When choosing between two (or more) tech jobs, non-salary compensation should always be a deciding factor. Squeezed by the tech industry’s low unemployment rate, companies are offering more perks than ever in order to pull in specialized tech talent. And that’s great for tech pros—so long as they do their due diligence before signing an employment contract.

One of the more buzzed-about perks to emerge in recent years is unlimited paid time off (PTO). When companies such as Netflix first touted employees’ ability to take as much vacation or sick time as they needed, it was lauded as a revolutionary step. Outside of the tech industry, however, companies have been slow to embrace it, perhaps out of fear that some employees will end up taking too much time; according to the Society for Human Resource Management, just 1-2 percent of companies offered the benefit in 2016, a number virtually unchanged since 2011.

From an employee perspective, unlimited PTO may offer some additional pitfalls. If it’s offered as part of a job package, make sure to ask the recruiter or hiring manager some tough questions.

“Does unpaid vacation time accrue?”

Federal law doesn’t require employers to pay for accrued time off once an employee leaves a position, while employment laws on this vary from state to state. “Some states do require vacation time that has been accrued to be paid out upon the employee’s departure, and other states do not have that requirement,” noted Paula Brantner, senior advisor at Workplace Fairness, a non-profit that promotes employee rights.

In the state of California, for example, employers are usually required to pay accrued time off—but unlimited paid time off doesn’t accrue. So although unlimited PTO is touted as a benefit, it’s actually a cost-saving measure for companies based in the state.

Senior technical recruiter Jennifer Bensusen suggests getting all details about PTO in writing as part of your contract or offer letter. That way, if you lose your job or resign from your position, you’ll know what you’re owed in terms of vacation pay.

“It’s something people probably don’t think about, but you can ask, ‘What’s the minimum paid time off that I would be granted and therefore would be paid for upon my departure?’” Bensusen said. “That’s something that should be clarified because it could be a loophole for companies.”

“Do people actually take time off?”

Unlimited paid time off looks great on paper, but if you land a position at a company where taking time off is frowned upon, then it’s not something you really benefit from. “If you’re a software developer who’s contributing to a project, your group may not [want] you taking a couple of months off,” Bensusen said.

During the job-negotiation process, it’s potentially beneficial to ask how much vacation time is actually used by people in the position. In a similar vein, you can also ask whether people take time off at multiple points throughout the year. This can give you some good insight into the company’s “vacation culture.”

“The company that wants to hire you is going to tout all of their policies, but you might get there and find out that, although you have unlimited vacation, nobody ever takes any,” Brantner said. “They may look down on people who take vacations, or there may be certain times of year when you’re not allowed to take time off due to workload.”

You may also wind up in a position that expects employees to check in or even complete work during their vacations. Brantner recommends speaking with a firm’s current employees in order to get as much information as possible about this, especially if the perk is important to you. Sometimes the employees will share stories that are very different from how the company presents the benefit.

Being clear on your expectations for PTO and aware of the company’s “true” culture with regard to vacations can help you settle on a job where you get the time away from the office that you need.

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